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  • James Brownlowe

Will or Trust?


Congratulations! You’ve made your decision to start your Estate Plan. But, now you may ask --- Do I need a will or trust? Like most decisions that face us --- it depends.


For some, a will may be appropriate. A will is a testamentary document that defines how one’s assets will be distributed after death. The good news about that is the distribution is your choice and not simply dictated by California’s laws of intestate succession. As noted in a previous article, intestate succession laws can sometimes lead to some unintended consequences. However, a common misconception is that a will does not have to go through a court administered probate. This, in most cases, is not true. Probate estates with assets of over $150,000 distributed via a will still have to go through a court administered probate.


So, what is probate? Probate is a court administered process to distribute the assets of a deceased person. The basic problem with probate, and why most of us should try to avoid probate, is that it is a court process that is mired in administrative requirements. This takes not only time, but can eat away at an estate’s assets in attorney fees and court costs. For example, statutory provisions of the probate code allow an attorney to charge up to $23,000 in fees for a probate estate worth $1,000,000. These fees can be avoided by avoiding probate.


A revocable living trust may be a better choice for those of us that have assets over $150,000 (the limit for an informal transfer of assets without probate). However, assets that are distributed in accordance with a trust are not subject to probate. Furthermore, contrary to what some may believe, one does not lose control of their assets when they are held in a revocable trust. Like the name implies, a revocable living trust is fully revocable during the “settlor’s” (the one that created the trust) lifetime and one can buy, sell, or donate property that is held in a revocable trust just as one could if it were not held in trust.


When one creates a revocable living trust (also known as an “inter vivos” trust), the creators of the trust (typically a husband and wife or domestic partners) transfer legal title of their assets to the “trustees” of the living trust. The trustees are typically the married couple or the domestic partners who act as joint trustees during their lifetimes. They retain full power over the assets. When one of the trustees dies, several things can happen. All the assets can remain in trust with the survivor as the sole trustee, or the decedent’s property can be held in an irrevocable trust for the benefit of the spouse or another beneficiary (perhaps a child from a previous marriage), or they can be distributed outright. The options are many. But, most importantly, the court never gets involved even after the death of the second spouse or partner. At the death of the surviving spouse or partner, a successor trustee (designated in the trust) will step in to administer and distribute the assets per the provisions of the trust.


The bottom line is we all need an estate plan to distribute our assets. A will may be the answer for the young, single person with no children and not many assets. But, as we move on in life --- things get more complicated and an estate planning package that centers upon a revocable living trust may be the right answer for many of us.


If you have questions about what type of estate planning is best for you, contact me for a free consultation at 661-388-1592 or jim@brownlowelaw.com.


Please note, this article provides “legal information” and does not constitute “legal advice” for any specific situation.

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Please be aware the information provided in this website is intended to be "legal information" only and does not constitute "legal advice".